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“We must consider what this country has become in deciding what [a statute] has reserved.” So wrote Judge Richard Posner, Circuit Judge of the 7th Circuit Court of Appeals, quoting Supreme Court Justice Oliver Wendell Holmes in Missouri v. Holland, 252 U.S. 416, 433-34 (1920), in his concurring opinion of the 7th Circuit’s landmark ruling that a person who alleges employment discrimination on the basis of sexual orientation has put forth a case of sex discrimination under Title VII. That’s right. It finally happened.

On April 4, 2017, in the matter of Hively v. Ivy Tech Community College of Indiana, No. 15-1720 (7th Cir. Apr. 4, 2017), the 7th Circuit Court of Appeals, sitting en banc, held that Title VII of the Civil Rights Act of 1964, which protects employees from discrimination on the basis of their sex, extends the same protections to employees on the basis of their sexual orientation. The courthouse doors, once closed to homosexual or bisexual employees seeking relief from discrimination under Title VII, have opened. Some might call it judicial activism. Others might call it common sense. Either way, the Title VII landscape has shifted.

To be clear, the statutory language has not changed. The statute provides (for those employers subject to Title VII) that “it shall be an unlawful employment practice for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a). In Hively v. Ivy Tech, an openly lesbian adjunct professor of the college alleged she had been passed over for promotion and then let go from her position because of her sexual orientation. In reviewing the case, the 7th Circuit readily acknowledged that the term “sex” in the statute was universally understood to exclude “sexual orientation.” The court commented that the federal courts of appeals felt bound by precedent until the statute either was amended by Congress or reinterpreted by the United States Supreme Court, both of which remained to be seen. In other words, for Ms. Hively, the “writing was on the wall,” or at least ostensibly so.

Then the 7th Circuit reimagined the statute. The court expressed: “It is therefore neither here nor there that the Congress that enacted the Civil Rights Act in 1964 and chose to include sex as a prohibited basis for employment discrimination (no matter why it did so) may not have realized or understood the full scope of the words it chose.” The Court further commented that “the fact that the enacting Congress may not have anticipated a particular application of the law cannot stand in the way of the provisions of the law that are on the books.” To suggest that perhaps the drafters of the law did not fully understand or appreciate the “full scope” of the word “sex” in 1964 is, no doubt, an unprecedented execution of judicial sleight of hand. Regardless, the court, acknowledged it was called upon to decide what it means to discriminate on the basis of sex and, in particular, whether actions taken on the basis of sexual orientation are a subset of actions taken on the basis of sex. According to the court, these are questions of statutory interpretation well within the competence of the judiciary.

Then the court proceeded to march methodically towards its inevitable conclusion. First, the 7th Circuit noted that “the goalposts have been moving over the years.” Times have changed. There is a much greater awareness, not to mention acceptance, of sexual orientation now than in 1964. The court further observed that the Equal Employment Opportunity Commission, in Baldwin v. Foxx, EEOC Appeal No. 0120133080, 2015 WL 4397641 (July 15, 2015), asserted its position that Title VII’s prohibition against sex discrimination includes discrimination on the basis of sexual orientation.

The 7th Circuit then went on to discuss the developments in constitutional law, not only in the employment arena but in the broader area of discrimination on the basis of sexual orientation, which supported this shift in paradigm (and reinterpretation of the statute). According to the court, key among those decisions are: Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) (gender stereotyping falls within Title VII’s protective ambit); Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75 (1998) (same-sex harassment is sexual harassment nonetheless); Obergefell v. Hodges, 135 S.Ct. 2584 (2015) (the Due Process and Equal Protection Clauses of the Constitution protect the right of same-sex couples to marry); Romer v. Evans, 517 U.S. 620 (1996) (striking a provision of the Colorado Constitution forbidding its state’s government from taking action designed to protect homosexual, lesbian, or bisexual persons); Lawrence v. Texas, 539 U.S. 558 (2003) (invalidating a Texas statute criminalizing homosexual intimacy between consenting adults as a violation of due process); and United States v. Windsor, 133 S.Ct. 2675 (2013), which found unconstitutional the part of the Defense of Marriage Act (DOMA) that excluded a same-sex partner from the definition of “spouse” in other federal statutes.

The 7th Circuit observed that, should the term “sex” in Title VII not include sexual orientation, “bizarre results ensue from the current regime.” For instance, “it creates a paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act.” According to the 7th Circuit, what the drafters of Title VII “understandably didn’t understand was how attitudes toward homosexuals would change” since 1964. Now was the time, and Hively was the case, to reconcile the irreconcilable.

The bottom line of the 7th Circuit’s decision in Hively is simple: Ms. Hively stated a claim of discrimination under Title VII when she alleged she suffered discrimination because she is gay. In other words, Title VII includes in its protections sexual orientation as a subset of “sex” discrimination.

The decision, though technically limited to sexual orientation, likely (or presumably) extends to claims of discrimination on the basis of one’s gender identity. Indeed, it would be anachronistic and inconsistent of the court to read “sexual orientation” into “sex” but not “gender identity” into “gender,” and the 7th Circuit itself acknowledged how difficult it is “to extricate the gender nonconformity claims from the sexual orientation claims.”

Whether the 7th Circuit’s decision extends to gender identity or withstands scrutiny on appeal to the Supreme Court – which now seems predestined – remains to be seen. Still, the significance of the court’s ruling and the change in federal law that either: (i) has arrived and is here to stay; or (ii) is just around the corner, cannot be overstated. This change is less significant in states like New Jersey, which by state law already prohibit discrimination on the basis of sexual orientation, gender identity, marital status, domestic partnership or civil union status. See The New Jersey Law Against Discrimination, N.J.S.A. 10:5-12, which makes it unlawful to subject employees to differential treatment because of their race, creed, color, national origin, nationality, ancestry, age, sex (including pregnancy), familial status, marital status, domestic partnership or civil union status, affectional or sexual orientation, gender identity or expression, atypical hereditary cellular or blood trait, genetic information, liability for military service, and mental or physical disability, perceived disability, and AIDS and HIV status. However, for employers and employees in states like Pennsylvania (which has yet to amend The Pennsylvania Human Relations Act, 43 P.S. § 955), or Georgia (its Fair Employment Practices Act applies only to state agencies and even then does not include sexual orientation as a protected class), the 7th Circuit’s ruling is a potential game-changer. Employees not previously protected, except perhaps under their employers’ own self-regulating anti-discrimination policies, now may be entitled to protection under federal law.

The Hively ruling could be a wake-up call to employers to revisit their handbooks, anti-discrimination policies and procedures, call their employment lawyers, and (at the very least) give some critical thought to this important issue. As Judge Posner expressed in his concurring opinion: “it has taken still longer, with a substantial volume of cases struggling and failing to maintain a plausible, defensible line between sex discrimination and sexual-orientation discrimination, to realize that homosexuality is nothing worse than failing to fulfill stereotypical gender roles.” Not anymore.

Compare jurisdictions:Litigation: Enforcement of Foreign Judgments

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